Manufacturing Operations Management (MOM) projects typically start from production processes. Once the initial scope is implemented; extensions are evaluated to increase the ROI of the solution. Inventory management is often the low hanging fruit. Below you can find an explanation as to why it might make sense to let MOM manage your inventory.
As a point of clarification, ERP needs to be updated with inventory levels, but the updates can be automated by integrating the two systems.
There are 6 main benefits of managing inventory in MOM:
1. Inventory Reduction
MOM has real-time visibility into production orders and their stage. This information is essential to implement a Pull replenishment model. By allowing your warehouse personnel to have visibility of current and subsequent orders, with their components and up-to-date WIP inventory levels, they can deliver the exact quantity of material at the time when it is needed.
2. Reducing Transportation
To implement a Pull system, you need to know exact inventory levels at shop floor locations being replenished. This helps in minimizing unnecessary inventory movements between the warehouse and shop floor. ERP view of production is typically at a high level. It is too labor intensive to manage detailed data in ERP, and it can cause performance issues. MOM provides the necessary level of granularity allowing you to deliver material just-in-time and avoid unnecessary movements.
3. End-to-End Traceability
Manufacturers in many industries are obliged to track data on how a certain product was made. In addition to that, they might need to have a history of inventory movements (components and finished goods). Creating traceability reports based on data from multiple systems is complex and time consuming. Too often, it does not provide satisfactory results when data models are not compliant. Using one system for all inventory movements and production history solves this problem and saves a lot of time.
4. Accurate and Timely Containment
Recall campaigns are not only costly but can also ruin company reputation. By having detailed, consistent, end-to-end traceability data, you can identify and prevent bad inventory from being consumed or shipped. You can assess the potential impact in real time and propagate information to block the suspected inventory. This can be done within the factory or across the supply chain.
5. Increased Efficiency
Think about the time that is typically wasted by warehouse and production personnel on exchanging information. Time that supervisors waste on analyzing possible production scenarios. The money the company could make by completing additional orders or avoiding material shortages. This can be improved if necessary information resides in one system where employees can access and share it in real time. Ability to make timely and informative decisions will enable you to run your business more efficiently than your competition.
6. Change Management
Now, let’s think long term. To remain competitive, it is essential that your company continually improves its processes. By having multiple systems, you will spend more time and money on development to implement process changes. Having one flexible system environment will make your company more agile and will improve user adoption.
This summarizes the benefits. Even if your MOM system has native capabilities to handle inventory, implementing such functionality is not trivial. The system needs to be well designed and implemented to handle your specific requirements. However, this is a topic for another blog.